Payment Methods

Square Cash Launches Instant Access To Payments

Square Cash is trying to turn around its money-losing proposition, launching a new service that enables people who receive a payment via Square Cash to cash out the money to a bank account in real time. The catch: They have to be willing to pay a fee of 1 percent.

That’s according to Recode, which said that those who don’t want to pay the fee will see the payment post to their bank account on the next business day.

According to the report, the move on the part of Square Cash showcases the desire on the part of the company to make money off of Square Cash, since Square is under intense scrutiny as a publicly traded company. The existing business model in which it charges small businesses 2.75 percent to accept payments from customers via the app hasn’t been material to the business, the report noted. Still, the fee to get instant access to cash flies in the face of what many people see as a benefit to using Square over competitor Venmo: free same-day deposits. The report noted Square is confident consumers will follow business customers and not mind paying the 1 percent for immediate access to their cash.

Square is also reportedly rolling out virtual payment cards that will enable cash users to purchase things online and via app using the money that is housed in their Square Cash account. Square is working to make the virtual cards compatible with Apple Pay and Android Pay so consumers can use Square Cash funds to tap and pay in stores that already accept mobile payment.

Square managed to redeem its disappointing Q1 performance with healthier Q2 earnings. The quarter saw the stock price plunging by 12 percent, as investors showed concern with Square’s increasing expenditures. However, payment volumes were strong in Q2, and losses were reined in. Square has struggled in 2016 amid a rift with Starbucks and negative media attention on CEO Jack Dorsey. But the company’s growing client base of more profitable and established firms implies a sustainable business model, while Square Capital increases lending services to SMBs and plans an expansion into traditional loans. Square may face a challenge here because this space is partly spoken for by American Express and Chase, who are also dabbling in SMB online lending.


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